"In the land of the blind, the one-eyed man is king". The Dutch humanist, Erasmus, established this maxim several centuries ago, yet its wisdom persists today. Today’s challenge in the financial regulatory world is to find a wise one-eyed man to provide a modicum of common sense to the policy world. Three visible stories: the pay-to-play pension scandals, the latest attempt by a government to buy jobs and private equity as vampire, and their associated remedies cry out for a financial Cyclops to bring reason to bear.

"Play-to-Play" scandals in NY, NM, CA, CT, IL and several other states have generated frequent headlines connecting public pension plans, private equity firms and government officials. In each case, one or more government officials solicited or received illegal compensation for directing investment dollars to a private equity firm that paid the bribe either directly or indirectly through a “fake” intermediary. No legitimate agency firm was involved in any of the illicit activity. Yet, the policy "cure" for this problem was to declare agents persona non grata at many state and municipal funds. Our one-eyed man finds a tear forming at the edge of his eye in bemusement at this solution.

The national zero-sum game of states buying jobs from each other has now been bred with the federal foray into government adventure capital. Adventure capital was most recently seen in the predictable failure of Solyndra and other federal green financings grounded in hope, not homework. Rhode Island is now embarrassed and further strained financially by the collapse of 38 Studios, a startup video game company run by former Red Sox pitcher, Curt Schilling. In 2011 Rhode Island guaranteed $75 MM in loans to attract away from Massachusetts the purported 450 jobs this now insolvent company would create. Our one-eyed man winced as he watched a nearly insolvent state hurl $75 MM at a company founded by a man whose management background consisted of a hard slider and a bloody sock. At a cost of $167,000 per imagined job he wondered what assumption of income tax revenue from those jobs made this a risk worth taking.

The hyperbolic ersatz news atmosphere accompanying the US Presidential campaign has placed a bright light on a cartoon version of private equity that most closely resembles the plot line of Other Peoples’ Money. In a balanced attempt to restore statesmanship to the national dialog, Newark Mayor Cory Booker took issue with the distorted description, but was quickly chastised for his comments by the zealots. In a scene echoing Claude Rains’ faux surprise “I am shocked to discover gambling in this establishment” in Casablanca, our President released a video describing private equity as vampires while he was sitting at a presidential fund raiser being hosted by the COO of one of the largest private equity firms. Our one-eyed man blinks in disbelief at the irony.